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McDonald v. Robinson

United States District Court, E.D. Virginia, Alexandria Division

January 10, 2019

MATTHEW McDONALD, et al, Plaintiffs,
EDWARD G. ROBINSON III, et al, Defendants.


          Leonie M. Brinkema United States District Judge

         Before the Court is the magistrate judge's Report and Recommendation [Dkt. No. 196] (the "Report") recommending an entry of default against defendants Carla DeSilva McPhun ("McPhun") and Cadem Capital Group ("Cadem") (collectively, the "McPhun Defendants"). The McPhun Defendants have objected to the Report. For the reasons that follow, the Court will adopt the Report in full and direct the Clerk to enter default against the McPhun Defendants.


         Matthew McDonald ("McDonald") and McDHoldings, LLC ("MCDH") (collectively, "plaintiffs") initiated this civil action in June 2018, claiming that they had been victims of a fraudulent scheme involving sham real estate investments. They named as defendants the McPhun Defendants as well as Edward G. Robinson III ("Robinson"), Edward G. Robinson III Consulting, LLC ("EGIII"), Choice Management, LLC ("Choice"), and Christian E. D'Andrade ("D'Andrade"). One by one, most of the defendants have defaulted or have been dismissed from the case. The Clerk entered defaults as to Choice and D'Andrade in October 2018 [Dkt. Nos. 91 and 92], and the Court granted plaintiffs' motion to dismiss all claims against Robinson and EGIII in December 2018 [Dkt. No. 179], leaving only McPhun and Cadem, which is the real estate investment trade name of which McPhun is the sole proprietor.

         In April 2018, one of McPhun's business associates, Keisha L. Williams ("Williams"), was indicted for wire fraud in violation of 18 U.S.C. § 1343 and money laundering in violation of 18 U.S.C.§ 1957.[1] See United States v. Williams. No. 1:18-cr-160 (E.D. Va. Apr. 11, 2018). Williams had masterminded a complex fraudulent scheme that continued for over three years and that ultimately resulted in her victims losing over $5.4 million. In September 2018, less than a month before Williams's trial was set to begin, the Government charged both McPhun and D'Andrade with wire fraud in connection with Williams's scheme. United States v. McPhun. No. 1:18-cr-333 (E.D. Va. Sept. 17, 2018); United States v. D'Andrade. No. 1:18-cr-332 (E.D. Va. Sept. 19, 2018). McPhun and D'Andrade negotiated plea bargains with the Government and agreed to testify at Williams's trial. As a result of her guilty plea, McPhun was convicted, sentenced to two years' supervised probation, and ordered to pay the mandatory $100 special assessment as well as $433, 000 in restitution to victims. D'Andrade, in turn, was sentenced to three years' supervised probation and was ordered to pay the $100 special assessment along with $2, 281, 239 to victims.

         Although plaintiffs claim to have been victims of Williams's scheme, they did not name her as a defendant and were not identified as victims in any of the criminal prosecutions of Williams, McPhun, or D'Andrade. Instead, plaintiffs moved for orders of restitution before McPhun and D'Andrade were sentenced. Neither McDonald nor MCDH was included as a victim in McPhun's restitution order, although D'Andrade's restitution order provides that MCDH is entitled to recover $68, 000 from D'Andrade.[2]

         Turning to this civil action, plaintiffs served the McPhun Defendants with process in July 2018 [Dkt. Nos. 6 and 8], and shortly thereafter attorney Laura Golden Liff ("Liff') of Miles & Stockbridge P.C. entered an appearance on their behalf [Dkt. No. 14]. The McPhun Defendants sought and were granted a two-week extension of time in which to file a responsive pleading [Dkt. No. 18], after which they timely filed a motion to dismiss for lack of personal jurisdiction [Dkt. No. 26]. They subsequently moved to dismiss for failure to state a claim [Dkt. No. 37] and withdrew their prior motion [Dkt. No. 49]. The motion was denied on September 7, 2018 [Dkt. No. 63], and the case proceeded to discovery.

         On September 14, 2018, Liff moved to withdraw her appearance as counsel for the McPhun Defendants [Dkt. No. 67], explaining that the McPhun Defendants had "failed to substantially fulfill an obligation" to her and that "continuing to represent [them would] result in an unreasonable financial burden" [Dkt. No. 68]. The motion was granted three days later [Dkt. No. 70]. From that point onward, McPhun has represented herself and Cadem pro se.[3]

         The McPhun Defendants have repeatedly failed to comply with discovery rules, deadlines, and the magistrate judge's orders. On October 19, 2018, plaintiffs moved to compel the McPhun Defendants to make their initial disclosures under Federal Rule of Civil Procedure 26(a)(1) and to supplement or correct their answer to plaintiffs' complaint [Dkt. No. 109]. The magistrate judge held a hearing on plaintiffs' motion to compel on November 2, 2018, at which McPhun did not appear [Dkt. No. 126].[4] The magistrate judge granted plaintiffs' motion and ordered the McPhun Defendants to make their initial disclosures and supplement or correct their answer "with truthful, accurate, and complete statements" no later than close of business on November 8, 2018 [Dkt. No. 128]. The Order also warned the McPhun Defendants that failure to comply with the Order's terms "may result in sanctions, including the Court entering default judgment against them."

         The McPhun Defendants did not comply with the Order. As a result, on November 9, 2018, plaintiffs moved for sanctions and an entry of default against the McPhun Defendants [Dkt. No. 150]. Plaintiffs noticed a hearing on their motion for November 16, 2018, but McPhun again failed to appear [Dkt. No. 158]. Accordingly, the magistrate judge ordered the McPhun Defendants to appear before her on November 30, 2018 "to show cause why the Court should not enter default judgment against them" [Dkt. No. 159]. McPhun again failed to appear at the show cause hearing, and the magistrate judge indicated she would take plaintiffs' motion under advisement and recommend an entry of default against the McPhun Defendants as a sanction under Federal Rule of Civil Procedure 37.

         On December 10, 2018, McPhun was sentenced by this Court for her involvement with the Williams case. An explicit condition of the probationary sentence McPhun received was that she would "respond to all legitimate discovery requests and court orders in the related civil case." McPhun. No. 1:18-cr-331 (E.D. Va. Dec. 10, 2018).

         On December 13, 2018, plaintiffs moved for default judgment against the McPhun Defendants as well as Choice and D'Andrade [Dkt. No. 184]. The following day, McPhun responded to plaintiffs' motion for default judgment and requested an extension of time to comply with the magistrate judge's orders [Dkt. Nos. 189 and 190]. McPhun explained that she "ha[d] been functioning in a state of duress" due to the criminal prosecution as well as various health issues in her family and that as a result "[i]t ha[d] been difficult for [her] to keep up." She also claimed that although she had received electronic notice of all new docket entries since late September 2018, she had been unable to view any of the documents or filings but had since received training from the Clerk's office that "walked [her] through" how to access those documents. Finally, she argued that she had lacked a "proper understanding" of the terms "in portions of Plaintiffs['] filings" and had mistakenly thought that her discovery obligations had ceased after she retained counsel in mid-November in hopes of reaching a settlement with plaintiffs.[5] In response, the magistrate judge ordered the McPhun Defendants to appear for another show-cause hearing on December 21, 2018 [Dkt. No. 192].

         The magistrate judge held a hearing on December 21, but once again McPhun failed to appear, and no other representative appeared on behalf of the McPhun Defendants [Dkt. No. 194]. Accordingly, the magistrate judge issued an order in which she denied the McPhun Defendants' motion for an extension of time, took plaintiffs' motion for default judgment under advisement, stayed further discovery in the case, and prohibited the McPhun Defendants from "supporting or opposing any claims or defenses as well as introducing any evidence at trial" under Federal Rule of Civil Procedure 37(b)(2)(A)(ii) [Dkt. No. 195]. Five days later, the magistrate judge issued the Report at issue here [Dkt. No. 196], in which she detailed the foregoing and recommended sanctions in the form of an entry of default.[6]

         The McPhun Defendants have filed an objection to the magistrate judge's Report. McPhun principally attributes the McPhun Defendants' failures to comply with deadlines and the magistrate judge's orders to her pro se status, stating that she lacks "full knowledge and etiquette of the law" and that "it is overwhelming to manage this case without legal assistance." McPhun denies willfully disregarding the magistrate judge's orders, insisting that any "neglect resulted from lack of legal knowledge, practices and procedures." With respect to not attending the December 21 hearing, McPhun claims that she "missed" the electronic notification of the hearing date and did not learn of the hearing ...

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